TEHRAN — For Hossein, a 32-year-old marketing professional in Tehran, the dream of replacing his aging Peugeot 206 has become an impossible financial hurdle. Despite a recent salary increase bringing his monthly earnings to approximately 900 million rials—roughly $390 USD, or four-and-a-half times the national minimum wage—he finds himself priced out of both the imported and domestic vehicle markets.
Hossein’s situation reflects a broader national emergency fueled by the conflict that began on February 28, when United States and Israeli forces launched a surprise military campaign against Iran, followed by a stringent siege and crippling sanctions. The war has triggered a severe economic contraction, causing domestic car prices to surge between 40% and 80% since hostilities began, with some models commanding premiums exceeding 130% over their September 2025 values.
After selling his current 13-year-old vehicle for an estimated 10 billion rials ($4,350), Hossein faces exorbitant replacement costs. A newer Peugeot 207 with an automatic transmission costs 28 billion rials ($12,170), requiring him to save more than 20 months of his entire salary. Opting for a Shahin sedan would demand 24 months of savings, while a Reera crossover requires nearly three years of income, assuming prices remain static and he forgoes all other expenses.
“I’m losing hope of ever being able to buy a new domestic production car too, unless the country opens up and becomes a bit more normal again,” Hossein told Al Jazeera, requesting anonymity for security reasons. Given the rapid rise in living costs and stagnant incomes, saving such sums is virtually unattainable for most Iranians.
Beyond purchase prices, the cost of vehicle maintenance has skyrocketed. Locally produced tires, motor oil, brake pads, and clutch kits have at least doubled in price since last year, with certain components tripling in cost. These inflated prices coincide with dangerously low safety standards in domestically produced vehicles, which contribute to a staggering road casualty rate. In the current solar Hijri month of Shahrivar alone, at least 1,609 people have died on intercity roads, continuing an annual death toll exceeding 20,000.
Systemic Issues and War Damage
Experts attribute the crisis to a combination of state protectionism, economic isolation, restricted imports, and corruption. The war has exacerbated these structural problems; extensive bombing by Israeli and US forces has damaged major steel manufacturers, while a naval blockade of southern ports has disrupted supply chains from neighboring markets like the United Arab Emirates.
Mohammad Rashidi, a member of Iran’s parliament, criticized the industry’s lack of accountability. “People are forced to buy expensive low-quality cars whose real prices should be a quarter of global prices, and this is a direct harm done to them,” Rashidi stated. “The traces of a mafia system are visible throughout the process.” His comments echo broader allegations from officials and state-linked media who describe the sector as resembling an organized crime operation.
Production figures underscore the industry’s decline. State media reported that only 233,000 vehicles were manufactured or assembled in the first five months of 2026, down from 366,000 during the same period the previous year. Imports remain negligible, with merely 25,000 vehicles brought into the country, restricted largely to a handful of state-linked entities. High duties and value-added taxes can inflate final prices by up to 200%.
A Showroom of Unrealized Dreams
The disparity between global and local pricing is stark. A 2026 Toyota Land Cruiser VXR, priced at approximately $86,000 in the UAE, sells for around 660 billion rials ($287,000) in Iran. Similarly, an Exeed VX SUV, which retails for $32,000 in China and $42,000 in the UAE, costs Iranian buyers the equivalent of $53,000 when assembled from imported parts by a state-linked company.
Last week, an “international” car exhibition in Tehran featured mostly Chinese vehicles, which remain accessible due to Tehran’s oil exports to Beijing. However, the event highlighted the depth of the crisis rather than offering relief. Many domestic manufacturers were absent, either due to lack of inventory or customer disputes over undelivered vehicles. Spare parts for displayed cars were either unavailable or priced far above international rates.
The affordability gap was perhaps most evident at the exhibition, where the cheapest vehicle, a Chinese-made XPENG G9 electric SUV, was priced at 120 billion rials ($52,150). Calculations showed that a worker earning the minimum wage would need 50 years of total salary—without spending on food, housing, or clothing—to afford it.
Despite the prohibitive costs, large crowds gathered outside the venue. “It was sad because most people just came to take pictures with the cars they knew they could never afford,” said one attendee. “The doors of the cars were locked too.”
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